Prescription (Scotland) Act 2018 - Consultation on Commencement Regulations

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Closes 14 Oct 2020

Introduction

Introduction

The doctrine of prescription serves a vital function in the civil justice system.  Negative prescription sets time-limits for when obligations (and rights), such as obligations under a contract, are extinguished.  The rules of negative prescription[1] as they currently stand are, for the most part, to be found in the Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”).

The Prescription (Scotland) Act 2018 (“the 2018 Act”), when commenced, will make a number of changes to the rules of negative prescription, addressing certain issues which have caused or may cause difficulty in practice.

The 2018 Act takes forward the legislative recommendations contained in the Scottish Law Commission (“the Commission”) Report on Prescription of July 2017 (“the Report”).[2]  Greater detail as to the legal and practical issues which informed the Act are set out in the Report and also in the Discussion Paper on Prescription of February 2016.[3]

Scots law, like many legal systems, recognises that it is fair, in certain circumstances, for legal rights to expire with the passage of time.  Prescription is justified by a number of policy considerations.  There are clear benefits to bringing actions early, in particular, delay may adversely affect the quality of justice.  Evidence may deteriorate or be lost, including witnesses dying or becoming incapacitated.  It may be unfair for a debtor to have an action raised against them long after the circumstances that gave rise to it have passed.  It is reasonable that debtors should be able to organise their affairs and resources on the basis that, after a definite period of time, their obligation is extinguished.[4]  The public interest also lies in disputes being resolved as quickly as possible.  Considerations of legal certainty justify, as a general rule, a cut-off beyond which obligations are extinguished and therefore claims may not be litigated.  Prescription is an essential part of balancing individual interests on one hand and serving the wider public interest on the other.  This means that there will be individual cases where prescription appears to operate harshly to extinguish a creditor’s right but, in the wider interests of fairness, justice and certainty, prescription needs to strike a fair balance overall.

The changes made by the 2018 Act are designed to increase clarity, legal certainty and fairness as well as promote a more efficient use of resources, such as pursuers being less likely to have to raise court proceedings to preserve a right, and reduce costs for those involved in litigation and insurance.  The Act makes these changes by amending the 1973 Act.  Most notably, the 2018 Act makes changes in the following areas:

  • the scope of the 5 year negative prescription;
  • section 11(3) of the 1973 Act and the discoverability test;
  • the long-stop prescriptive periods under sections 7 and 8 of the 1973 Act; and,
  • contracting out and standstill agreements.[5]

Very little was said about commencement of the 2018 Act during parliamentary passage, except that sufficient time be given to creditors/debtors to arrange their affairs and that any such provisions should avoid the potential for claims which have already prescribed under the current law from being revived as a result of any provisions in the 2018 Act.[6]

The purpose of this consultation is to seek the views of interested parties on the Scottish Government’s proposed commencement regulations.

 

[1] For ease, when using the term “prescription” in the remainder of the consultation we will be referring to “negative prescription”.

[4] In relation to a debt, it is usual to refer to a creditor and debtor.  For other rights and obligations to which prescription applies, such as in relation to personal injury, it is more often appropriate to refer to a pursuer and defender.  To assist the reader, this consultation refers to debtors and creditors (unless the context otherwise requires), which are considered to be most easily understood.

[5] This list is non-exhaustive.

[6] In its Report the Commission briefly discuss potential arrangements for bringing into effect its recommendations to the law of prescription.  See paragraphs 1.30 to 1.35.